RBS sells Bank of China stakeFurther evidence of changing priorities for banks
14 January 2009
Royal Bank of Scotland today announced the sale of its entire stake in Bank of China for £1.6 billion.
The NatWest owner, which is now 57% owned by the UK Government, said the disposal of the 4.3% holding reflected its "new strategic priorities".
RBS is one of several major investors to sell stakes in Chinese banks in recent months, including Bank of America and Swiss giant UBS.
The Edinburgh-based bank acquired the stake for £900 million in August 2005.
RBS also looking to sell its insurance operations
As well as helping to bolster RBS's balance sheet, the disposal will meet new chief executive Stephen Hester's plan to unwind those interests of less strategic importance to the company.
Mr Hester today said China remained an important market within its Asian businesses and that RBS would continue to pursue opportunities for growth through existing consumer and corporate businesses.
RBS is also understood to be in discussions over the sale of its insurance divisions - including Direct Line and Churchill.
The bank put the division up for sale last year when it unveiled plans for a cash call on its shareholders to weather the credit storm. But according to recent reports the insurance operations, which are cash generative, are considered more valuable now than they were to the previous management.
RBS is the second largest general insurer in the UK and has 18,000 staff. It is the UK's largest insurer of cars, as well as a major player in travel, home and pet insurance.
In August RBS unveiled its first loss in 40 years as a public company after suffering writedowns of £5.9 billion as it reported statutory pre-tax losses of £692 million for the first half of 2008.
RBS investors snubbed its £15 billion share offer in November, leaving the Government to step in to buy up the unwanted shares and shore up the bank's ailing finances.
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